A new framework for assessing exploration licences in NSW has failed the first real test, say critics

THE NSW Government’s response to corrupted coal exploration licence scandals has failed on one of its first tests after an Upper Hunter mine used an exemption and sidestepped a new assessment process, critics say.

Peabody Energy’s Wilpinjong coal mine between Denman and Mudgee has used an exemption under the new resource exploration framework to apply for an exploration licence over more than 1600 hectares of land east of Wollar village, based on the new lease area being an extension of the existing Wilpinjong mine.

Wilpinjong has long-term contracts to supply coal to NSW power stations including Bayswater at Muswellbrook.

The exemption allows Wilpinjong to avoid assessment by a new advisory body established after Independent Commission Against Corruption hearings into corrupted Upper Hunter coal mine exploration lease processes at Doyles Creek and Mount Penny.

While the new framework “allows for the controlled, strategic release and competitive allocation” of exploration licences and provides “greater clarity and transparency in decision making”, an “operational allocation” exemption allows existing mines to apply for exploration leases in nearby areas at any time and avoid the new framework.

Wilpinjong manager for project development, Ian Flood, told the local community that the lease application meant it was “more efficient to use our existing infrastructure than for a different company to build new infrastructure”.

But Wollar Progress Association secretary and environmental activist Bev Smiles said the application exposed a gaping loophole in the new framework which would have its greatest impact on the Hunter because of the concentration of existing mines.

“The community expected that after what was revealed at ICAC about previous Hunter exploration licence processes, any releases of coal resources for exploration would go through a more rigorous process,” Ms Smiles said.

“What the Wilpinjong case demonstrates is that is not the case because of this exemption, which is of particular concern because the greatest concentration of existing mines that can use this loophole and avoid the new process is in the Hunter region.”

Under the “operational allocation” exemption process Wilpinjong’s application is assessed by an internal NSW Government committee. A public “market test” process that called for expressions of interest over the exploration lease area from other mining interests failed to attract a single competitor to challenge Wilpinjong’s application.

Ms Smiles said the Wilpinjong application in 2017 was particularly troubling because it relied on the mine arguing the exploration lease area was an extension of existing operations, when a Wilpinjong extension approval in August, 2017 is the subject of a Land and Environment Court challenge that returns to court in February.

The case is the first to test whether the Planning Assessment Commission adequately assessed the mine expansion’s climate change impacts, including emissions from the burning of coal.

The proper assessment of downstream emissions is particularly important in the Wilpinjong case because a substantial proportion of the mine’s coal is burnt in Hunter power stations.

Wollar Progress Association, which launched the case, is arguing the most recent mine extension approval is invalid. Wilpinjong mine was first approved in 2006 and has been the subject of repeated, controversial modifications. It produces 14 million tonnes of coal per year and is one of the highest annual coal producers in the state.

In a letter to NSW Resources and Energy Minister Don Harwin in November, the association said any decision on the new exploration area release needed to be deferred until a decision in the Land and Environment Court.

Peabody did not respond to a request for comment.

The Department of Planning said the operational allocation exemption “enables the NSW community and industry to maximise the value of the State’s coal resources by allowing existing coal title holders to apply for an additional adjacent exploration title in order to support a better mine design or recover coal resources that would otherwise be sterilised”.

“Should an assessment for operation allocation find that the resource could support a stand-alone operation the application would be rejected and processed through the strategic release framework,” a department spokesperson said.

“​A renewal of an exploration licence is not a mining approval, and this does not give the licence holder permission to mine.”